The merged Mitsubishi-Tokyo Financial Group and UFJ Holdings agglomeration is in effect today, with the new MUFJ (ugly abbreviation) trading on TSE (8306.JP) this morning. The world's largest bank sold off on its first day, closing down 4.7%.

For a market which is closed today, Korea is putting on some serious news flow.

Hana Bank, which has also expressed interest in LG Card, has bolstered its shareholding roster today by selling a 9.4% stake in its new FHC (to be listed 12/1) to Goldman Sachs' private equity unit. GS had previously bought 5m shares in Hana Bank out of treasury stock (~2.5%). It's not clear whether the FHC shares will be new primary ones or taken from other holdings.

Hana is a quite good operation, and certainly GS is getting in cheap, but our worries about the FHC concept are stoked by the presentation below, which is heavily reliant on that old saw, "revenue synergies."

* Hana September IR Presentation

Shinhan's CEO says that the bank (given that the remainder of the FHC is irrelevant, that's what it amounts to) is considering the purchase of LG Card, KEB, or both.

LG Card would likely be a good fit if done at a reasonable price; the card companies belong with banks so that they can cross-sell and enjoy stable funding. I would question whether Shinhan has the existing credit talent to keep the business from going tits-up again, but that caveat applies to almost any domestic bidder.

KEB is a head-scratcher. The obvious motivation is that its acquisition would make Shinhan significantly larger than Kookmin and Woori, and thus itself secure from takeover and able to bask in the prestige of being #1. However, the typical benefits of in-market merger would seem not to apply, given that Shinhan still has yet to integrate the last large bank it bought - Cho Hung.

I'm certain the unions won't be any more pleased about the prospect of integrating KEB with Shinhan Bank, so it would likely be another extended co-habitation under the FHC, which destroys any prospect of cost savings.

The silver lining for shareholders is that I don't see how Shinhan could finance the KEB purchase anyway - Lone Star is not going to take anything but cash on the barrelhead.

New FMCG analysis shows that a key reason many bank acquisitions fall short of expectations is that buyers do not uncover organic revenue growth problems at the seller. Consequently, while agreeing to a deal price, the acquirer’s management does not fully appreciate that they are implicitly signing up for a heroic turnaround of an underperforming institution.

More after the jump:

If, as a potential buyer, your retail organic revenue growth has been consistently strong and has been underpinned by distinctive customer value, you have higher odds of success in the M&A game. However, even for such banks, it is important to think twice if your target is in a region where it faces particularly strong competition.

Conversely, if your performance and that of the target are sub par, and management has a “must-win-this-deal” mentality, then a plan for how the target will be managed so as to be competitive in the market becomes paramount.

(via BankStocks)

Like all financial-firm executives, finance chiefs of the country's regional banks are grappling with a rise in short-term rates even as long-term rates fall. This convergence of rates -- a bugbear that bankers call a flattening yield curve -- cuts profit margins by raising the banks' borrowing costs while lowering the rates they charge on loans to customers.

Perhaps it was not so much the positioning failure as the failure to accurately warn investors that did them in:

Analysts believe the disconnect between the executives' public remarks and the bottom lines was the real cause of their departure. Some say more departures are possible.

"Bank CFOs are now being pilloried because of their inability to correctly gauge this shift in the financial markets," said Richard X. Bove, an analyst with Punk Ziegel & Co. Messrs. Graf and Oken "did not provide the appropriate signal to shareholders."

Asian bankers are of course unable to take as much structural rate risk due to the lack of long-term yield curves in most local currencies, but we have still seen some earnings disappointments on the NIM and NII fronts this past reporting period.

GE Capital has joined Newbridge by taking a 7% stake in Shenzhen Development Bank, the first such China investment for the global finance company. We suspect that this investment will take the form of approximately $100m in primary shares, which will bolster the bank's capital. As Newbridge already controls close to 18% of SDB, it will also mean the bank is effectively at its 25% foreign ownership limit for now, although we also expect that this could be more flexible for SDB given that Newbridge already has effective management control.

Note that per GE's last presentation on Asia, they actually seem more focused on India and SE Asia in the consumer finance arena, meaning that we might see more deals in those markets soon.